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U.S. Solar Industry Stays Strong Despite Tariffs on Imported Panels

U.S. Solar Industry Stays Strong Despite Tariffs on Imported Panels

The announcement of new 30% tariffs on imported solar panels in January, one of the early salvos in a trade war between the U.S. and China that has dominated headlines for the past year, put the solar industry on edge. Many solar professionals feared that our livelihoods, as well as the rapid momentum that solar power had gained over the past decade, would be jeopardized.

As we wrote at the time, panel tariffs would have an economic chilling effect on one of the U.S.’ most promising industries, which has been a force for new job creation and a major contributor to the national economy. GTM Research wrote that these tariffs “could devastate the U.S. industry, wiping out two-thirds of solar systems forecast to be installed over the next five years.” The experts weren’t wrong - tariffs did delay or destroy a significant amount of solar projects in 2018, setting back clean energy goals and reducing the solar industry’s ability to contribute to economic growth.

However, due to the strength of the solar industry and continually growing consumer support for clean energy adoption, the tariffs have not been as devastating as many predicted. Let’s take a look at why:

Solar Panel Prices Continue to Trend Downward

Solar tariffs negatively impacted many utility-scale solar projects in 2018 and caused a contraction in the solar market overall, but despite additional fees, solar panel prices are now lower than ever. How? Several unforeseen (and unpredictable) circumstances have worked in the industry’s favor.

As Quartz reports, “Federal tax credits, state renewable energy goals, and plunging prices for equipment from China have driven healthy demand despite the import duties,” leading to optimism and momentum for the solar market in 2019. In late May, Chinese authorities announced they were “removing domestic feed-in tariffs (favorable long-term contracts for renewable energy producers) and moving utility-scale solar to competitive bidding.” As a result of this competition between rival manufacturers, PV panel prices dropped to their lowest level ever.

This was great news for solar professionals and consumers, as it had a leveling effect on the price increase imposed through trade tariffs. If the tariffs had not gone into effect, however, consumers would see even lower prices today and the solar industry would have been spared a lot of panic and delayed or canceled projects.

Panel Options Continue to Increase

Another mitigating factor for solar consumers has been the continually expanding options they have when implementing solar collection and storage technology. Many new products, including building-integrated photovoltaic (BIPV) panels, have taken the market by storm over the past year, increasing the design and functionality options for commercial and residential solar adopters. American-made solar panel options are increasing as well, although the tariffs did not achieve their stated goal of leveling competition between foreign and domestic photovoltaic producers.

Consumers Want More Solar Power

Perhaps the greatest strength of the solar industry, and the primary reason it has weathered these tariffs as well as it has, is the growing consumer demand for solar power. Corporate adoption of solar power shows no signs of slowing, and although residential consumers were spooked by potentially higher prices related to the tariffs, the cultural consensus is firmly in favor of renewable energy growth. Despite the obstacles of the past year, the solar industry continues to win over the hearts and minds of Americans who understand how important alternative energy sources are to the future of our economy and our climate.

We aren’t out of the woods yet, however. Recently, the Wall Street Journal reported that nearly half the economists they polled consider the ongoing trade war between the US and China “the biggest threat to the U.S. economy in 2019.” Despite this threat, the solar industry has remained strong and anticipates further growth.

Solar Design Studio remains committed to providing solar solutions with the greatest possible return on investment for our clients. If you’re ready to start a solar project of your own, contact us today to learn more.

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Bob Solger is Mr. Solar to the Kansas City region. With a passion to forge change and be green well before it was cool to do so, Bob has led the regional market as an engineer and spokesperson for the adoption of solar energy. He completes his projects professionally and continues to inspire by teaching others how to get the most from solar installations.

Ace Wagner

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